In the previous section it was noted that the process of
examining the sector from an economic perspective draws
attention to many of the issues which need to be considered. In
addition, the sponsors and the government may have their own
views about issues of special concern.

This section introduces a number of the main issues that
are likely to arise in studies of fisheries sectors. It is not
exclusive and there may be others which will be apparent to a
sector study team when it examines a sector.

Many of the points noted will be relevant to various
aspects of the study. It is not possible, therefore, to state in
advance where issues should be placed in the final report,
although some suggestion as to where they might be relevant are
noted in the suggested chapter headings of a sector study
contained in section 10 of this Guide.

A commercial fish resource is an asset because it is
capable of generating a flow of benefits; a recreational fish
resource also can often be treated as an asset. One of the chief
ways in which the value of fisheries to a country can be
enhanced is through effective control and management of those
resources. Fisheries development strategy, therefore, should be
directed, inter alia, towards this end.

A sector study team should examine what is, or should
be, the focus of fisheries policy in the country. The first
requirement is a description of the resources and an examination
of those species which, in terms of their economic importance
to the country, represent priorities for research and
management.

Very often, a fundamental potential source of
improvement in resource use is the better management of that
resource. This general conclusion can be reached without
detailed information about a fishery and does not require a
complex research programme to verify. The observation of
declining total yields, low catch rates and marginal fishing
vessels just covering the opportunity costs of operating in the
fishery constitute enough information in practice to confirm that
there are weaknesses in the management of the fishery.

However, whilst this observation has a general
application, governments are able to act unilaterally and
effectively only when the fish stocks lie wholly or mostly within
their area of national responsibility. When stocks are shared
with other States, or are straddling, effective national action can
only be taken in conjunction with other States which have an
economic interest in the fish stocks concerned.

A sector study should include an assessment of the extent
to which control and management are currently being achieved
and proposals for future action, for example, the preparation of
a fisheries management plan concurrently with the preparation
of a sector development plan.

A final word of warning may be needed. The use of the
term “the maximum sustainable yield” of a fisheries resource,
is highly misleading if it is intended to denote the optimal level
of exploitation and to be a target level of annual catch. Even if
the knowledge of resources permits an estimation of MSY, this
point will not coincide with the level of yield which would
ensure the biological sustainability of the resource; in most
cases, it is this latter point which will be consistent with the
maximization of economic efficiency.

In line with this last point, the objective of sustainable
development is a guiding principle of fisheries management.

In most economic models of fisheries the maintenance of
a stable and sustainable flow of benefits from the fish resources
is a condition of optimality built into the logic of the analysis.
Moreover, if, over time, the value of the fishery as a source of
economic benefits can be expected to increase, this factor will
tend to shift optimal catching strategies towards the future, when
the benefit/cost ratio is greater, rather than to the present. To
the extent that there are theoretical exceptions to this (Clark
1990), perhaps these can be regarded more as exercises in
analysis rather than policy recommendations.

When considering sustainability, it may also be relevant
to distinguish between different types of fishing fleets. For
example, the evidence collected for the study may suggest that
some of the underlying conditions of artisanal fisheries are
conducive to sustainable development. The conditions that
might be relevant include a strong orientation among the
fisherfolk to collective action, taking a long-term view of needs
and an aversion to risk. In contrast, industrial fleet operations
may be more competitive and risk prone, and also require a
rapid return on investment. In these circumstances, it could be
argued that the institutional and social context of artisanal
fisheries supply a foundation for sustainability not present in
more competitive industrial fishing. Equally, it must be said,
the evidence could point in the other direction. A small number
of businesses engaged in well organised industrial fisheries may
also carry the potential for sustainable fishing operations,
implying a corresponding stability of income and employment5.

5 This paragraph only touches the surface of some insights from public
economics, including game theory. Under certain conditions repeated
plays of “prisoner's dilemma”-type games can produce cooperative
outcomes. A very approachable introduction to many of the issues,
including the application of game theory to the management of the
commons, is in Ostrom (1990).

Where there is increasing population pressure on an
artisanal sub-sector, its capacity to develop approaches to
fisheries management is weakened (Pauly, 1990). In this
situation, it is often relevant to examine the alternative
employement opportunities for artisanal fisherfolk which might
go some way to ensuring that the industry does not have to
absorb more and more surplus labour.

More often than not, the situation where artisanal
fisheries have to absorb an increasing number of people is when
these fisheries become the employment of last resort. In this
case, unemployment is a structural problem in the economy.
There may be little a sector study team can do directly to
remedy this problem. It can, however, begin to generate the
information which will enable the fisheries administration to
show the substantial economic benefits which would arise from
focusing the creation of new employment opportunities on
relieving the pressure of surplus labour on the fisheries sector.

Most management measures are designed to protect fish
stocks rather than to directly limit the access of fishermen to the
stocks. Experience shows that such measures have often been
successful in the short term in achieving the conservation of
resources and higher stock sizes. Their short-term success,
however, has meant that their long-term impact has been usually
to increase the attraction of the stocks to fishermen, thereby
increasing the number of resource users and the intensity of use
of the resources and, ultimately, to reduce stock size and
resilience.

Other options which may be available are measures to
limit access to stocks and measures which restrict access to
certain areas by particular users.

However, in general, policy measures which have as their
aim the conservation of fish stocks are not the most effective in
achieving sustainability. A sector study team, therefore, should
be sensitive to the potential for management based on limited
access to fish stocks.

A sector study should be able to point the appropriate
direction to take on this issue. It should also generate much of
the information required in a management strategy to assist the
government in determining the feasibility of some of policy
instruments which might be employed, including an assessment
of their respective advantages and disadvantages.

Externalities occur when the economic activities of one
agent affect another in ways other than through the price
mechanism. A comprehensive survey of the economic theory of
externalities is in Cornes and Sandler (1986).

The concept of “externality” is fundamental to fisheries.
A way of analysing the economics of a fishery is in terms of
fishing vessels imposing external costs upon each other. As
each vessel enters a fishery it has an impact on other vessels,
partly because it catches fish which could have been caught by
others, partly because it may impede the operations of others,
and partly because of its effect on the capacity of the resource
to reproduce.

The fisheries sector may also impose external costs on
other sectors. For example, a fishing harbour may create
pollution; the cutting of mangrove for fish ponds may reduce the
filter properties of a belt of mangrove, so increasing pollution
load in the sea, remove a barrier to storm surges, and destroy
a fish habitat.

Other sectors may impose external costs on the fisheries
sector. There are many such externalities, which may be
categorized into two groups. One is pollution and resource
degradation which damages or destroys fish habitat; the other is
pollution which has toxic effects on fish.

A sector study team should establish the extent to which
the fisheries authorities are aware of the externalities, both
generated by the sector and imposed on the fisheries sector from
elsewhere, and the extent to which it is and should be taking a
proactive role in reducing or mitigating them.

It should be noted that externalities - or unpriced
effects - are not exclusive to the environment and natural
resources and can be beneficial. For example, the existence of
ports which fishing vessels can use, transport infrastructure
which widens the market for fish and fish products, and the
proximity of a large urban population which offers a nearby
market for fish, are examples of positive externalities and
provide a synergy between different sectors.

There is a primafacie case for arguing that resources will flow
towards their best use if they are competitively priced; thus in the
case of linkages the outcome of a sector study may be simply to
ensure that the price mechanism works effectively in the
allocation of resources. However, markets rarely function
perfectly, and the externality is the extreme case of market
failure. For this reason, in most coastal areas, some degree of
careful management by the public sector plays an essential part.
Two examples follow.

Example 1: Port congestion

A common conflict of use concerns harbour facilities - a resource
which is frequently in scarce supply. Commercial harbour users
will frequently see the fishing industry as a nuisance - the
relatively small fishing vessels impose adverse congestion
externalities on the larger commercial vessels. However, it is
also quite likely to be the case that the fishing industry generates
significant income and employment, both directly and indirectly
because of its evident widespread linkages to industries onshore.
The onshore benefits from the fishing industry are harder to
identify but no less real than those of commercial port operations.

The sector study should appraise the wider contribution of the
fishing industry and suggests options for development in this case,
port development-which will fully reflect the fisheries sector's
contribution to the economy.

Example 2: Pollution

Pollution management provides a second example to show that in
the presence of externalities, free market solutions do not always
produce a satisfactory outcome. Consider the case of a river
which carries pollution discharged from factories along the river
bank. The river eventually reaches the sea where there is an
established fishery. If the pollution causes lower catch rates than
would otherwise be the case, it is in the interests of the fishermen
exploiting the fishery to pay for its control. But they would most
likely refuse to pay, not only because they would see themselves
as the victims and the factories as the perpetrators, but also
because they would fear that some fishermen, perhaps from some
other area, would take advantage of their efforts. Would the
factories pay? For them discharging pollution into the river costs
nothing. Even if public spiritedness induced one or two to incur
the perhaps heavy cost of controlling or stopping the production
of harmful effluent, they would complain that others were free
riding on the back of their efforts. In these and similar situations,
intervention by the authorities is generally required, for which a
range of policy instruments may be considered.

Example 3: Other examples, in brief

Numerous other conflicts between resource users can arise. For
example, the catching sector may be in competition for the seabed
with gravel dredging operations. The coastal aquaculture industry
may be in conflict with conservationists and with small-scale
fishermen. Rural agriculture and tourism may compete for
resources and space with the fisheries sector.

In economic analysis the concept of “linkage” has a
precise meaning. Linkages arise when one economic activity
influences others through the price system. For example, there
is a linkage between fishermen and suppliers of inputs. There
are many other important linkages too, such as in the fish
distribution chain (wholesalers, processors, consumers); often,
in inland aquaculture, between aquacultureand agriculture; and,
sometimes, between the fish processing industry and the food
processing industry.

Linkages become especially important in economic
assessment when there is underemployment or unemployment.
This is because a change at the beginning of the chain of
linkages will cause multiple changes further down the chain.

If there are significant linkages in the fisheries sector, the
impact, in terms of the consequences on employment, of a fall
in fish landings can be multiplied several fold through ancillary
activities to the catching sector and in the processing and
distribution system. When there is also significant
unemployment or underemployment in the economy generally,
other sectors will not be able, at least in the short to medium
term, to absorb the redundant labour.

Where there are such significant linkages - and a major
fish processing and distribution subsector is not required to
create them-the fallacy is apparent of a strategy which is aimed
at keeping vessels at sea to maximise employment in a fully or
overexploited fishery. Whilst such a policy may maximise
employment on vessels in the short term, it will have the effect
in the longer term of reduced landings and, therefore, reduced
employment on shore. In addition, the increased risk to the
long-term sustainability of the resource will be a further threat
to employment.

In many countries there is also a linkage between
agriculture and small-scale fisheries through the labour market.
Labour shed from agriculture (and also other industries) as a
result of, perhaps, changes in the agricultural outputs produced,
often takes up fishing as an alternative source of income. Many
artisanal fishermen are also part-time farmers. These
relationships need to be identified so that the full implications of
policy proposals are understood.

A sector study team should view such changes in terms
of their contribution to economic welfare.

Underlying the analysis of values are all the technical
relationships of the industry - the relationships between physical
inputs and output. This relationship is known as the production
function. A sector study should examine the scope for
combining inputs in a better way than they are combined at
present, to save on resources or to increase output; in other
words, to make production more efficient.

Conflicts arise between groups of fishermen because of
competition for fish resources. A sector study should report
these and suggest action to alleviate problems. Very often, in
exploited fisheries, fish which is not caught by one fisherman
will be caught by another. Access, therefore, can easily become
a source of dispute. Conflicts are particularly acute in fisheries
compared to other industries because fishing grounds are often
open, to a greater or lesser degree, to competitors. In this
respect, the industry is unlike most others.

Economic benefit results from a reduction in conflict.
The costs incurred in the “rush for fish” are reduced as fishing
skippers take a more calculated approach to their best
opportunities. These may arise through a more measured
exploitation of fish marketing opportunities or greater economy

A sector study brings together what is known about the biology of
the resources exploited by the country's industry. It should aim
to specify a relationship between fishing effort and catches so that
estimates can be made of outcomes under different assumptions.
In particular, it should aim to reach a judgement about whether
the relationship between fishing effort and yield can be made
more efficient, that is a reduction in fishing effort to catch the
same or larger quantity and value of fish.

Example 2: The ability of the fishing fleet to optimise its
contribution to economic welfare

A sector study reviews the state of the fishing fleet. It does this
to reach a judgement about whether it is of an appropriate size
and composition for the available resources, and whether the
technology used on board is appropriate for the country and the
resources available to it. It examines the age and condition of
vessels to assess the scope for replacement.

Example 3: The capacity of the aquaculture subsector to
optimise its contribution to economic welfare

Where appropriate, a sector study reviews the current state of
aquaculture. It examines the country's fish farms to see if inputs
are being used efficiently to produce fish. It comments on the
technical capability of the farmers and might make
recommendations for the upgrading of people and systems. A
study might propose ways in which production from aquaculture
might be expanded. In other words, a sector study examines the
availability of inputs, e.g., land, water, labour, and equipment,
etc., to compare what is being achieved with what could be
achieved.
in fishing practices. Furthermore, the social problems which
arise when people's lives are disrupted by fishing disagreements
are reduced.

When a study team seeks to make a qualitative
assessment of the potential gain from the reduction in conflict on
a fishing ground, it is important to be clear about the distinction
between productivity and efficiency. Productivity is a measure
of output per unit of input (usually labour or capital). More
efficient fishing systems are those which generate larger net
benefits by increasing the value of output or reducing the unit
cost.

This point is noted in this context because it may be
mistaken to resolve conflicts on the fishing grounds on the
assumption that because larger vessels are more productive, as
measured by output per man, or by some unit of production,
they necessarily provide greater economic benefits than smaller
vessels. On the contrary, it is quite possible that smaller vessels
are more efficient because the cost per unit of fish landed is
lower or the value of their catch is higher.

Establishing the relative efficiency of different groups of
vessels in this type of situation may be one of the cases where
the sector study team should investigate primary data.

The sector study should consider the effectiveness and
efficiency of the fisheries authorities. The term “fisheries
authorities” refers to the organizations responsible for the
regulation and development of the fisheries sector at national
and sub-national levels, and for the management of fish
resources. In many situations but not all, these responsibilities
will rest with fisheries departments. The paragraphs below are
written within this context. However, a sector study team
should be aware that fisheries administration and fisheries
management may be implemented through more than one
organization.

Effectiveness refers to the capacity of the fisheries
department to meet the objectives of the sector. An effective
department must be able to carry many functions which include
the following:

identify the statistics required and to either collect
them directly or be able, where appropriate, to work
through other government agencies in their collection;

analyse data for the formulation of strategies, plans
and projects;

develop coherent proposals for limited access and/or
effort limitation in capture fisheries and have the
capability of implementing subsequent decisions;

formulate and implement plans, programmes and
projects, and monitor and evaluate them by having the
appropriate tools and techniques at its disposal.

Within this general capacity, the fisheries department
would be able to defend the interest of the fishing industry in
negotiations with other ministries or departments when dealing
with cross-sectoral issues and in the negotiation of budgetary
allocations.

Efficiency refers to the capacity of the department to
operate at a reasonable level of cost. It is not possible to supply
an objective measure of whether a department (or any
bureaucracy) is worthwhile. However, the economic rule which
states that a service should be expanded as long as marginal
benefit resulting from it exceeds its marginal costs is a helpful
guide. For example, the potential incremental gains from the
effective policing of EEZs which accrue to producers and
consumers, are often large. It may be worth incurring,
therefore, significant costs to achieve effective policing.

Similarly, the potential net incremental gains from an
effective extension service to aquaculture can be large. They
may accrue to producers in the form of extra profits, but may
also benefit consumers if production increases and prices fall.

The expectedincremental gains provide a rough guide to
an upper band as to how much should be spent on a particular
service provided by the department. There are, however, many
instances of services provided by government which are more
costly than any conceivable benefit resulting from them.

A sector study, therefore, should report on the current
state of the department, reaching a judgement about skills and
expertise, number of staff and its capability to work for the
development of the industry. A sector study should also
recommend any changes which the sector study team judges to
be required. It might be proposed, for example, to end some
activities currently carried out by the public sector, or to
introduce some new specialist skills, or to introduce an internal
training programme.

Other institutions will almost certainlybe involved in the
fisheries sector. Some of these will be part of the public sector
whilst others will be private sector institutions.

In the public sector, the trade department might be
responsible for marine safety, the armed forces for fisheries
protection, the foreign affairs department for international
negotiations, various regional authorities for other aspects of
administration. There may be an institution charged with the
coordination of projects and activities in the coastal area. Other
organizations may have official responsibilities to the industry
on issues such as food safety, customs regulations, ports and
harbours, training and research. Different organizations will
have responsibility for the collection of different statistics of
value to the fisheries department.

The organizations described above may have a direct
influence on the sector. Others may have an indirect, but
important, role. Examples are organizations responsible for
river and lake basin management, and for water management.

A sector study team should also take into account private
sector organizations, such as cooperatives, trade associations and
non-governmental organizations (NGOs) at the national, sub-national
and local level.

A sector study should identify all relevant institutions at
a national, sub-national and local level and describe their role,
the extent to which their functions overlap and where there are
any gaps. It should also reach a view on their relevance to the
successful management and development of the sector at present
and under any of the proposed options for development.

For a number of reasons a necessary condition for a
successful fishing industry is a respected and durable legislative
framework (North, 1990). In particular, fisheries management,
and hence the economic gains associated with it, cannot succeed
without a system of regulation which is respected by the fishing
community.

The framework of laws and regulations can influence the
industry in other ways. For example, foreign exchange control
may l
imit the access of the industry to important inputs; hygiene
regulations may penalise small-scale, low capital producers; or
minimum wage legislation may limit the scope for employment
in fish processing.

A sector study should examine the legislative framework
within which the industry operates and assess the extent to
which it adds or detracts from its successful economic
performance. It should be noted, for example, that conventional
fisheries regulations and legislation-which are aimed towards
fish conservation-may have the long-term effect of reducing
economic welfare; other solutions to over-exploitation of stocks
may have to be sought which incorporate ways of limiting
access to them (see 6.2 above).

All fisheries require management. Perhaps the key issue
in the success or failure of any management plan concerns the
monitoring and enforcement of regulations. So far as possible,
regulations and legislation should be designed in collaboration
with the sector and efforts made to convince the industry of
their value. In this way, voluntary compliance with regulations
will be increased. Fishermen's reactions to regulations will also
be influenced by the perception of the fairness, or equity, of the
system held in place by the regulations. A system which is
widely recognized as being fair, will be more likely to be one
where peer pressure assists in creating a general observance of
regulations. In its review of legislation and regulations, a sector
study team may find it necessary to examine this aspect.

However, whatever the degree of participation by the
industry in the framing of legislation and regulations,
governments require a strong enforcement capability. This is so
whether the regulations and legislation are designed to limit
access to the resource or, more conventionally, to protect the
stocks. The sector study will examine the enforcement
capability, its effectiveness and the institutional framework
within which it operates.

It is important that fisheries management regulations are
reinforced by an appropriate research programme which will
indicate the benefits to be derived from different measures.

A sector study should evaluate the performance of official
research for the sector. The fundamental question concerning
officially sponsored research is whether it contributes to
development objectives. Quite frequently, the sector as a whole
rather than individual businesses is the beneficiary of such
research which would not normally attract private funding. It
is important, however, that a research establishment should have
clear research objectives with proper procedures for the
evaluation of its work.

A sector study should also examine the scope and value
to the industry of non-official research, for example, in
universities.

A sector study team should examine how research
objectives are set. Whilst a certain amount of individually
determined research may be encouraged, the main body of
research work should be clearly related to critical issues
confronting the fisheries authorities. The team should look,
therefore, for a transparent institutional link between the
fisheries authorities and the research functions.

In examining the response of the fisheries research
function to critical issues, a study team should take into account
the cost and length of time required to acquire sound
quantitative results. In these circumstances, a team should look
to see what approach has been adopted by the research
establishment, and with what success.

Researchers may, either by conscious decision or by
default, adopt a long-term approach to research. However, the
time may not be available for a long-term approach but it may
be possible to achieve robust qualitative results in a shorter
term. A sector study team should consider if some long-term
programmes might be replaced by shorter-term approach. Such
an approach might possibly be adopted in conjunction with the
Precautionary Principle, under which actions which are
suspected to have severe environmental implications are banned
unless the originators can prove they are benign.

Box 5 lists some of the critical issues which may form
the subject of research.

Assessment of the effects of fishing and coastal aquaculture on the
ecosystem and on fisheries sustainability.

Identification and assessment of the impact on fisheries and
aquaculture of pollution and habitat degradation (requiring
information on the status of fish habitats, such as mangrove,
seagrass beds, and coral reefs, extent to which they have been
degraded, identification of activities responsible for their
degradation and future threats and, if possible, monetary
valuation of the damage).

Another avenue to examine is to what extent, and through
what institutional mechanisms, the research organization is
aware of and responsive to the perceived needs of the industry
resulting from factors originating outside the sector.

A sector study should examine the dissemination of
officially funded research. Staff of research institutes should be
expected to publish in scientific journals but it is important also
to produce information leaflets for the sector and the general
public.

If countries are going to make progress in fisheries it is
essential that officials, researchers and others have access to
good information. The fisheries community needs to be able to
participate in worldwide research so that the results can be
applied in all countries. For example, if researchers in one
country develop a new approach to the analysis of the dynamics
of the deep water snappers, then that information could be
important in the management of resources in a number of
others. A sector study, therefore, should look at channels of
information to ensure that national research teams are not
“reinventing the wheel” and are benefiting from all relevant
work.

A sector study team should take care to avoid focusing
too narrowly on what may be perceived to be fisheries issues.
Research of value to the fisheries sector will be concerned also
with cross-sectoral issues, as well as the traditional sectoral
research concerns. Such research, e.g., in gaining a greater
understanding of ecological functions and aspects of resource
dynamics, may be closely related to sectoral research; other
research may be outside the usual competence of fisheries
research institutes, e.g., in socio-economics and institutional
economics.

Fisheries authorities do not have to ensure that all
research is carried out by their scientists. A sector study,
however, should reach a judgement on (i) the level of
communication between the industry, on the one hand, and the
policy makers and scientists, on the other; (ii) communication
between policy makers and scientists, to ensure that the correct
priorities are set and to establish that the priorities match the
funding; and (iii) that the fisheries scientists are aware of
relevant research being carried out elsewhere.

Equity considerations are taken into account in policy and
project choices through socio-economic analysis. By undertaking
some socio-economic analysis in the sector study, a
sector study team introduces a check to policies and projects
aimed solely at profit maximisation.

Box 6 provides some examples of how this might come
about. A sector study asks if the evolution of the industry is
causing discrimination against any particular social group, such
as a cultural group or a gender. It also attempts to predict
possible damage to sub-populations under different policy
options.

Socio-economic analysis examines the social implications
of fisheries policies. Among other issues, a sector study might
consider alternative employment opportunities for fisherfolk
either within or outside the sector as fisheries management
might imply a reduction in fishing effort, which will lead to
fewer job opportunities for fisherfolk; even if there is no
immediate requirement for a reduction in the number of vessels,
changing technology and resource limits may limit the
employment opportunities on board individual vessels.

Coastal aquaculture development may sometimes be damaging to
artisanal fisherfolk or small farmers.

The creation of new outlets for fish may remove fish from the
traditional distribution system.

Fisherfolk may be physically displaced from their homes by
development activities, e.g., tourism.

Using socio-economic analysis, the study should seek to
take as wide a view as possible of the factors contributing to
fishing pressure on fish stocks and how far a fisheries
development strategy can address the problem. In some
instances, such a strategy might seek interventions from other
government agencies. For example, as part of a long-term
strategy, a fisheries department might seek improved communication
links between fishing communities and nearby rural
centres, improved health care facilities, education of children
and, recognizing the link between the education of women and
smaller family sizes, special attention being given to the
provision of secondary education of girls. A general guide to
taking social issues into account in development projects is
published by the Asian Development Bank (1991). Gender
issues are covered in Ostergaard (1992) who emphasises the
importance of gender awareness in sector and project analysis.

A clear definition and understanding of the artisanal
subsector in the fishing industry becomes especially important
in the context of socio-economic analysis. The subsector often
consists of fishermen and women who are not well organized,
many of whom operate part-time, and many of whom are on the
margins of the industry earning low incomes and with little
access to credit and infrastructure. The subsector may employ
large numbers of men and women, the latter largely in fish
processing and distribution.

Some examples of information which would contribute to
a socio-economic overview are listed in Box 7. In each case,
the information may relate to the current situation but a
historical comparison might be useful in showing whether and
how conditions are changing.

The role of human resources in the process of
development is fundamental. An obvious point, but worth
making, is that it is human skill and ingenuity on the one hand,
and human wants on the other, that make a fish industry
possible. The people who possess the expertise to exploit the
resource, to organize production and distribution and to
anticipate changing markets are what makes the industry work.

Kay (1993) uses the phrase “distinctive capabilities” to
denote the characteristics of human resources which give
individual businesses or countries a competitive advantage. For
example, in the fishing industry particular strengths might
include experience and skill in managing fishing vessels at long
distance or organising fish buying for processing on the high
seas (“klondyking”). Some countries have capabilities in the
construction, repair and maintenance of fishing vessels and
others have a long tradition of aquaculture production. Fishing
skills are often identifiable with a particular group of people and
equally some groups have established reputations as
entrepreneurs and traders.

Primary education enrolment, in numbers, by gender and as a
percentage of totals by gender in age group.

Secondary education enrolment, in numbers and as a percentage
of totals by gender and by age group.

Other indicators of educational status.

Maternal and infant mortalities.

Nutrition statistics.

Access to potable water.

Access to adequate sanitation.

Housing.

Participation of women in the sector.

A key question for a sector study is, therefore, what are
the special characteristics of a people which can add value to
the processes of production and distribution of fish? This
question must be addressed both within the review of the current
situation (the “stocktaking”), and also-to determine the human
resource potential-in the analysis section of the study.

While it is evident that cultural heritage, skills and
aptitudes should be harnessed wherever possible, experience
shows that people may find great difficulty in adopting new
skills and adapting to a different way of life associated with
them. Schemes to transform meat eaters into fish eaters and
fishermen into farmers, or even fish farmers, have often been
unsuccessful.

One of the roles of a sector study is to identify where
existing skills and aptitudes can be built upon to catch and
market underutilised species, to improve the quality of
production, and other ways to generate increased economic
benefits. The requirement for training target groups, and how
such training might be delivered may be a topic dealt with in a
sector study.

The issue of gender has been referred to above
(section 6.12). Nevertheless, the issue is sufficiently important
to note again, here, that a sector study should describe and
analyse the role of women in all aspects of the fishing operation.
In many countries, the role of women in the processing and
distribution sector is central.

The structure of the industry may be a matter for the
concern of government. For example, a government may seek
advice on ensuring that vessel ownership remains widely
dispersed, and not excessively concentrated in the hands of a
few companies or individuals. It may wish to review the
relative merits of cooperative or private ownership of industry
assets.

The ownership pattern in the industry may also be
significant for social analysis. For example, the requirement to
rent boats from non-fishing owners of vessels may be a factor
responsible for low fishing incomes. Moreover, the
consequences of losing the right to fish, perhaps because of
payment default following from overfishing and insufficient
income, may be very serious for the families concerned. The
sector study should also show gender awareness when examining
ownership patterns.

Innovation may be related to a number of the areas
considered in this section. It is important because it is a means
of creating and sustaining comparative advantage. A sector
study, therefore, should examine both the record of the introduction
of new technology into the sector and what conditions
have to be met to ensure the sector is competitive in the future.
Box 8 lists some of the areas which a sector study team might
consider in the context of innovation.

An issue which is likely to be important in many
countries concerns the reduction in the role of the State in
enterprise ownership and management. The case for reducing
or ending the State ownership and control of many potentially
commercial assets is now widely accepted. It is based on the
view that, in general, commercial activities are carried out more
efficiently by private rather than State enterprises.

The route that countries are taking from State ownership
to private ownership is varied because there are many different
approaches. To take a simple example, three options (amongst
others) for the privatisation of a State fish marketing
organization might be (i) closing down and sale of the
equipment; (ii) sale of the enterprise as a going concern to the
private sector; and (iii) the formation of a cooperative of some
of the workforce to buy the company.

The issue is complex and, therefore, must be handled
with care in the sector study. A summary of the principal
techniques of privatisation can be found in Vuylsteke (1988).

When considering privatisation issues it is also worth
recalling that the public sector has a positive role in fisheries
administration and development but that the dividing line
between what are appropriate activities in the public and private
spheres may need careful consideration.

Fisheries are a natural resource which is very often an
open access property to a greater or lesser degree. The open
access nature of the resource means that without some form of
intervention by the State, market failure and resource
misallocation can be guaranteed. The case, therefore, for an
involvement of the State is stronger than in many other
industries. Sometimes, it is difficult for governments to
determine where that dividing line should lie. Some
governments, for example, have sought to regulate fishing
through a State controlled fish marketing organization. The
sector study team should be prepared to analyse this issue and
provide the appropriate option(s) to the government.

Food security means that every household in an economy
should be able to produce or purchase sufficient food to meet
daily requirements (Baum and Tolbert, 1985). To achieve
this end, governments need to address both the supply and
demand for food.

Recent economic contributions (summarised in Ellis,
1992) have shifted the focus of analysis of food security to
adequate distribution and effective demand for food. One
reason for this shift is the fact that at a global level, food
availability has tended to outstrip population growth since the
mid-1970s. Many regions of the world have moved into food
self-sufficiency from a food deficit, and Western Europe and
North America have shown a persistent tendency to produce
structural surpluses of food.

The orthodoxy which concentrated on food supplies has
now been re-examined and found wanting. The essence of the
new approach is that, in general, people do not starve due to an
insufficient supply of food; they starve because they have
insufficient command over food. Thus, an overall deficiency in
food production is only one of many factors which may cause
food shortages. Sudden price rises, sudden falls in income, or
low family income, or a particular distribution of food within a
family can also be among the responsible causes.

For fisheries policy, the implication of this argument is
that the case for the expansion of fish production as a
contribution to food security needs to be examined with great
care. In many countries, the greatest contribution that fisheries
development can make to food security is by increasing incomes
through greater economic efficiency and, therefore, command
over food supplies.

A sector study may not be able to reach a firm conclusion
on this issue although it is likely to have implications for the
allocation of public sector resources. This might be the case if
the government has some underlying concern about food
availability and a preliminary view about the significance of fish
for some groups of consumers. A sector study may, therefore,
suggest that the contribution of fish to food supplies should be
a subject of further study, possibly within the framework of the
fisheries development plan.

The objective of a policy based on achieving sound
nutrition is to reduce malnourishment, especially when this
impairs health, growth or productive activity. Such an objective
is related to the objective of food security, although it is not
identical. Nutrition has traditionally been a branch of applied
biochemistry but in recent years has been studied by social
scientists. Some nutritionists now believe that, generally, if
people eat enough food (mainly staple grains) and obtain
sufficient calories, their protein and vitamin requirements will
normally be met (Timmer et al., 1983; Grigg, 1985; Timmer,
1987; Ellis, 1992). Mollett (1990) includes an example from
Peru which draws the same conclusion.

Globally, fish makes a significant contribution to dietary
protein. The Fifth World Food Survey indicated that the
contribution of fish to animal protein supplies in the developing
market economics was estimated to be 20 percent, compared
with 15 percent in the world as a whole. These general figures
hide wide differences between individual countries, regions and
social classes.

In sector study work, therefore, the issue of fish for good
nutrition should be handled with some caution. The importance
of fish for nutrition in particular situations cannot be assumed.
If a government says that it is interested in fish production as a
supplement to its objective of achieving improved standards of
nutrition, the question arises as to whether the nutritional
significance of fish can be substantiated.

The contribution of the fisheries sector to foreign
exchange earnings is often used as an argument for support to
be given to the sector.

While the foreign exchange earnings of a fisheries sector
may be considered important by the government of a country
which is short of hard currency, the issue needs to be handled
with caution. It is a fallacy to infer net economic benefits from
large foreign exchange earnings. Firstly, the industry uses
imported inputs, which should be offset against exports.
Secondly, even if there is a net surplus of hard currency
earnings, the contribution of the sector to the economy depends
on the overall balance between the value of resources in and
resources out, not on the traded portion of that balance only.

In this situation, the sector study team needs to have a
knowledge of the net economic benefits generated by the sector
coupled with the opportunity costs of labour and, especially, of
capital, before it can draw conclusions about the economic
benefits of the sector's foreign exchange earnings to the
economy.

Benefits from improved marketing of fish may include
one or more of the following:

countries can appropriate added value from fish as a
result of expert marketing;

consumers may be the beneficiaries of improvements
in marketing; for example, they might get fresher fish
at lower prices;

producers may be beneficiaries if their profits increase
as a result of higher prices - obtained from improvements
in quality, or lower costs following from
improvements in productivity.

The key point is that there are a number of points in the
production and distribution chain where increased value can be
obtained. Marketing expertise is required to identify the current
weaknesses and potential improvements.

Fish marketing is complicated because of the variety of
issues which must be considered in a marketing study. A
number of these are considered in Box 9.

A sector study should examine both domestic and export
markets. Inside the country, public markets are often the
channel through which consumers of fish become direct beneficiaries
of the activities of the fish industry and also the means
by which the sector benefits from consumer demand. However,
very often, cleanliness, hygiene, repairs and maintenance of
public markets are often conspicuous by the little attention paid
to them. Consequently, fish spoilage and lower public
acceptance of fish can often result. Public investment to remedy
these faults in markets may generate substantial economic and
social benefits.

harvesting technique, e.g., line-caught tuna may be more
valuable in the market place than fish caught by means of a
purse seine;

time between capture and use;

the way fish is processed and held on board influences the final
price-cleaning, gutting, ice, the use of containers,
temperatures, etc., may all have effect on the value of the
fish;

the way in which fish is handled may influence price, e.g., fish
damaged by hooks may attract a lower price than, for example,
fish boxed at sea;

the physical characteristics of wholesale and retail markets,
such as air conditioning and cleanliness, may influence prices;

the grading procedures and the sales procedure itself-price
descending or price ascending auctions or contracts-may be
significant;

the distribution system for fish - many issues, such as
processing plants, distribution systems, packaging, sales
procedures and payment methods are important;

consumer attitudes - affecting price, income and cross-elasticities
of demand - are influential and variable between
countries and social groups within countries;

the prices of substitutes, such as other animal protein foods,
are important in price determination.

In export markets, the possible requirement for State
intervention is usually different. There are quite likely to be net
returns to the country concerned if its exporters can increase
profitability through some export marketing. However, it is
possible that a thriving fish export industry may have adverse
socio-economic effects. For example, a rapidly expanding
export trade in shrimp may stimulate aquaculture in coastal
regions, which may have harmful social and environmental
effects. In such a situation, a sector study has to either assess
the likely impacts of such development or, more likely, propose
that further investigation is required.

A sector study should review the use made of market
information systems; widely distributed information about the
various aspects of markets, such as species in demand, prices
and presentation, is a means of reducing market imperfections.
In this connection, if the team notes that market information is
not widely distributed, it should make proposals for improving
the dissemination of data.

Marketing is a complex specialist area and a sector study
may conclude that further research is required. It might
recommend, for example, that a more comprehensive market
study be undertaken. This would include an analysis of the
structure of the distribution system, the functions of the various
agents within it, and an assessment of logistics; costs and
margins would also be included.

An issue which is related to marketing is hygiene
standards. The recommended approach to this is the application
of “Hazard Analysis Critical Control Point” (HACCP). This
should be used as a technique for identifying those processing
points where contamination can be best monitored and
controlled.

Internationally marketed fish and fish products must meet
the standards of the importing countries. The European Union,
for example, has defined the health conditions for placing fish
and fish products on the market in Council Directive
91/493/EEC. This Directive applies the same stringent
conditions to establishments exporting fish to the European
Union as it does to domestic fish processors.

A sector study should review food laws designed to
ensure the safety of food and protect the consumer, and
recommend improvements. Government intervention in this
area might include the placing of the requirement upon
processing plants to meet specified quality standards, the
training and deployment of government quality control
inspectors, and the organization of training courses for the fish
processing industry.

For many developing countries the availability of credit
is a problem both in capture fisheries and aquaculture. There
are three basic reasons why producers should wish to borrow.
They are as follows:

to finance occasional high expenditures, e.g., a
wedding;

to even out fluctuations in the availability of cash to
buy recurrent inputs; and

to finance investment.

Governments of developing countries and donor agencies
have frequently perceived a number of factors as justification for
the development of credit institutions for fish producers. These
have included the lack of a market in loans, the monopoly
power of private money lenders, and the difficulty of fisherfolk
in providing collateral against credit.

In a sector study it is important that the status of credit
to fish producers and processors be correctly diagnosed.
Further details of how to proceed may be found in Chapter 7 of
Ellis (1990).

A number of mistakes have been made in development
assistance in the provision of fisheries credit. Taking these into
account, a sector study should exercise due caution in its
analysis of credit. Facile solutions to the perceived problem can
easily worsen rather than improve the economic status of fishing
communities.

Some examples of problems associated with credit
programmes in the artisanal fisheries sector are shown in
Box 10.

The following points of guidance for a sector study team
are drawn from the above paragraphs:

focus on the fish resources of current and/or potential
economic importance to the country;

assess the extent to which effective fisheries
management is being currently achieved and examine
the fisheries authorities' proposals for the future in the
light of their technical and institutional capabilities;

present the broad management options available to
government as a basis for the management and
development strategies;

establish the extent to which fisheries authorities are
aware of those externalities generated outside the
sector and which impact upon it, and of those which
originate within the sector;

assess the extent to which the fisheries authorities are
able to, or should, take a proactive role in the
reduction or mitigation of externalities related to the
sector;

identify the economic linkages between components of
the fisheries sector and between the sector and other
sectors, and assess their contribution to economic
welfare;

examine the potential for combining inputs in a better
way in order to save resources or increase output, or
both;

report on conflicts and propose ways in which they
may be alleviated;

assess the effectiveness of the fisheries authorities and
make proposals for improving the efficiency with
which they meet the objectives of the sector;

identify where there are gaps and overlaps between the
fisheries authorities' work and that of other
institutions;

examine the legislative and institutional framework
within which the industry operates and assess the
extent to which it adds to, or detracts from, its
successful economic performance;

examine the level of capability of monitoring, control
and surveillance together with the degree to which
regulations are enforced, having regard to the
institutional setting and the effectiveness of the
relevant institutions;

reach a judgement on the effectiveness of fisheries
research in terms of its making a satisfactory
contribution to the sector achieving its development
objectives, and identify any impediments to this by
examining the institutional framework, methodologies,
information systems and the dissemination of research
findings;

show awareness of, and sensitivity towards, social
factors which may have a strong influence on the
capacity of the sector to contribute to national well-being;

identify where and how existing skills and aptitudes
can be further developed to generate increased
benefits;

review the structure of the industry in the light of the
government's objectives, and make appropriate
recommendations;

examine the record of the introduction of new
technology and management techniques to the sector
and assess what conditions have to be met to ensure
the competitiveness of the industry;

identify factors relevant to the proposed privatisation
of State-owned assets and make appropriate
recommendations;

take into account, when formulating recommendations,
any governmental concern there might be regarding
the importance of fish to food security and for
nutritional purposes;

assess the contribution of the sector to net economic
benefits where its contribution to foreign exchange is
used as a justification of a high level of government
support;

examine the marketing of fish, both domestic and
export, and make proposals as to how economic
benefits may be enhanced;

consider the effectiveness of credit programmes in the
artisanal subsector and make appropriate recommendations.

In many developing countries there are already savings available
in the food producing community. Many fishermen and fish
farmers (and other food producers) already have savings. The
problem may be finding means of mobilising the resources in the
community rather than channelling more funds into it. One
celebrated example of this process is the work of the Grameen
Bank in Bangladesh which has shown that the very poor can save,
borrow and repay loans by active participation in the Bank.

Example 2: The prerequisite of fisheries management

In many capture fisheries, the provision of additional credit to
small-scale fishermen may encourage the wrong kind of
development. Cheaper credit, in the absence of appropriate
fisheries management measures, may be a very damaging policy
approach. The corollary of this is that effective fisheries
management is a precondition for successful credit arrangements.

Example 3: Possible comparative benefits of informal credit

Informal credit may be already available through money lenders.
When the risks, transaction costs and expected inflation are taken
into account, the rates of interest may not necessarily be
significantly higher than rates would be for formal credit when all
the costs of credit delivery have been fully taken into account.
Moreover, informal credit is often readily available and, from the
lender's point of view, relatively secure as it is based on personal
knowledge.

Example 4: Difficulties in the provision of formal credit

For a variety of reasons many formal credit institutions have
either had to stop lending or, at least, extremely reluctant to offer
credit to the fishing industry. Repayment rates have been poor,
interest rates have been too low to cover the costs of money and
transaction costs, and the loans offered have been perceived by
the recipients as grants rather than loans.